World Bulletin/News Desk
A proposed corporate tax break on profits derived from research and development done in the United States is winning some bipartisan support in Congress, with the promise that it could spur jobs and innovation.
A "patent box" tax break is in the policy mix as lawmakers target full-scale tax reform in 2013. The idea is to give companies a tax break, an d a sizable one, on profits derived from patented products that originated with U.S. research and development.
Several European Union countries have embraced the patent box and the United Kingdom is set to adopt it next year. A bipartisan pair of U.S. lawmakers this week introduced a bill with a 10 percent tax for qualifying income.
The idea has its skeptics, both on its merits and viability. Critics say another tax break for business would lead to a race to the bottom in tax rates and potentially cut revenues. Backers say the global economy requires countries to compete to lure innovation.
"There is a race going on and the idea that we can just pretend we are not going to run the race is not a luxury we have," said Robert Atkinson, president of the Information Technology and Information Foundation, a think tank that gets some corporate funding.
Several experts at a recent meeting in Washington said a U.S. patent box, named for a box printed on tax return forms that companies would check to claim the break, might be too complex to implement.
"The main challenge in designing a patent box regime is to isolate income attributable to patents," said Peter Merrill, an economist at PricewaterhouseCoopers and former chief economist at the congressional Joint Committee on Taxation.
Merrill said the evidence links patent box policies to increased patent activity, but not necessarily to job growth.
In the United States, both Democrats and Republicans widely back a broad revamp of the U.S. tax code, likely including a cut in the corporate tax rate, which is high by global standards.
Movement of American jobs abroad is a hot political issue amid a sluggish economy and a tight presidential race.
President Barack Obama and some fellow Democrats support special tax breaks to encourage companies to move jobs back to the United States, while rival Republican presidential hopeful Mitt Romney says Obama's policies have hurt the economy.
Comprehensive tax reform, last accomplished in 1986 under President Ronald Reagan, is a daunting project expected to take years. Backers are pushing the patent box as a step forward.
"We should start by mixing the old, Americans' might in manufacturing, with the new, America's might in innovation," said Democratic Representative Allyson Schwartz, who has offered a patent box bill with House Republican Charles Boustany.
Any congressional action on the Schwartz-Boustany bill, or a parallel measure in the Senate, is unlikely before 2013.
A patent box proposal is among options in a corporate tax reform blueprint released last year by Republican Representative David Camp, chairman of the tax-writing Ways and Means Committee in the House of Representatives.
"While they haven't endorsed it, they are looking at it as a viable option," said Boustany spokesman Neal Patel.
The U.K.'s new system led drug giant GlaxoSmithKline Plc to promise more jobs in Britain. In March the company, which has cited the country's new patent box as a lure, said it would invest $792 million in a biotech plant there.
Apple, Microsoft, Alphabet, Cisco and Oracle hold about $504B, approximately one-third of all corporate cash in the United States
The Fund's head says 'corruption has a pernicious effect on the economy'
Exit would cost average monthly salary for each household, Organization for Economic Cooperation and Development says
Firms to see deterioration in credit metrics as low oil prices impact cash flows
OPEC exporters as well as other non-OPEC producers, including Russia, fail to agree on oil output freeze
Moody's has upgraded Argentina's credit rating after a US appeals court ruling this week cleared the way for Buenos Aires to proceed with the biggest debt issue by an emerging market country in 20 years.
Ahead of Doha meeting, OPEC says 'hurdles prevail as oversupply persists and inventories remain high'
Kuwaiti OPEC head says Russia and OPEC are likely to agree on oil output freeze
'The good news is that the recovery continues; we have growth; we are not in crisis,' Christine Lagarde says
The meeting is a 'follow-up' to last month's talks between Qatar, Russia, Saudi Arabia and Venezuela when they proposed an accord to freeze oil output at January levels
'They are not trimming output, only keeping it at the same levels...this is the same unchanged policy,' one expert says
Iran joining Venezuela, Saudi Arabia, Qatar and Russia in freezing oil output levels
According to the ratings agency Moody’s, Iran is fiscally and structurally well placed to come back into the global economic scene
PM Davutoglu meets the heads of the world's largest companies as he promotes Turkish economic interests at World Economic Forum
Fund cuts global growth forecasts for both 2016 and 2017 by 0.2 percentage points
'Runaway inequality has created a world where 62 people own as much wealth as the poorest half of the world’s population'